The last great oil rush

The last great oil rush

The last great oil rush

During my US trip at which time we passed through 38 States
in America, travelling by motorcar for nearly three weeks, we passed many many
trucks -– some travelling and many of them parked on the side of the road while
their drivers slept in their cabs.

At one particular stage, during a period of ten minutes
only, I counted 100 trucks coming in the opposite direction and realised for
the first time in my life that should anything happen to the oil production upon
which America depends, people could be starving within three or four days, as
the food would not arrive at the supermarkets.

It is therefore of great importance that we read the headline
in the Sunday Star Times, 28 October 2001: "Oil could be next
terrorist worry for US -– Americans' big concern these days is about a
white powder. Soon, it will be about a black liquid.

The anthrax attack is disrupting life in Washington, New York
and a few other cities. But should the terrorists get into a position to cut off
the flow of oil to America, the entire country might be brought to a halt.

At the moment, the oil markets favour consuming countries
such as the United States. Falling demand, induced by a slowdown in the world
economy, is pushing prices closer to $US20 a barrel than the $US28 the Saudi
Arabian oil minister would like to see.

The Opec cartel, most especially Saudi Arabia and Venezuela,
find prices too low to support their social and other spending. They want to cut
output to force prices up...

And Russia is sufficiently desperate for hard currency to
sell its oil at almost any price.

So if Opec turns down the taps, non-member countries would
immediately increase their production, leaving Opec with the worst of both
worlds -– a smaller market share and prices below its target range of
$US22-$US28 a barrel...

Also, if output cuts result in revenue losses as competitors
step up production, the government will be unable to support the lavish welfare
state that enables the Saudi royal family to stop its young population moving
from restlessness to out-right hostility to the regime.

This may be bad news for oil producers, but it should be good
news for consumers...

It is no coincidence that many of the terrorists involved
in the September 11 attack were Saudi nationals. Or that bin Laden gets most
of his funding from Saudi Arabia, where his fundamentalist brand of Islam is
accepted by many, if not most, of the country's people.

Some American policymakers remain unworried. They argue that
even if the bin Laden crew, or something like it took over Saudi Arabia,
they would still sell oil because they will want the revenues.

After all, Saddam Hussein is no friend of America, but he
continues to pump oil and America continues to buy it. But Hussein wants money
for his war machine and to finance his repressive regime, not to mention his own
multi-palace lifestyle.

Bin Laden's terrorists are less attracted by the
pleasures of the flesh and are willing to live uncomfortable lives if doing so
imposes great pain on America and the western countries they hate...

The Middle East contains almost two-thirds of the world's
oil reserves and probably a far larger portion of those that can be recovered at
low cost.

The American economy runs on oil. With less than 3% of
the world's reserves, America consumes more than 25% of the world's oil.
Take away its oil, or make it very expensive and the American economy will be
hit a lot harder even than it has been by recent terrorist attacks.

But no solution to this problem is in sight. Even if Congress
were to go along with Bush's proposals to increase production of domestic
energy, America would remain heavily dependent on the Middle East for the
lifeblood of its economy...

Neither increased supply nor decreased demand can do much
to reduce America's interest in the survival of a Saudi regime willing to
convert the black gold under its sands into dollars.

If bin Laden and his supporters are not removed as a threat
to a government friendly to America, white powder might become the least of
America's problems."

And then from a different perspective, we read an article
taken from The Dominion newspaper,

29 October 2001:

"The last great oil rush -– It is mid-February, 2002.
North America is in the depths of a bitter winter. Consumption of heating oil is
at an all-time high and petrol use is back to pre-war levels thanks to a long
slump in world prices, but the war of terrorism drags on...

The George W Bush-Tony Blair coalition is intact but under
intense pressure from Washington hawks who want to take the war to Baghdad...

Saudi Arabia erupts. The new offensive persuades millions in
Riyadh and Jedda that the war on terror is in fact the war on Islam against
which their imams have railed for months. Following the lead of a prominent
dissident cleric, tens of thousands take the streets to condemn the royal family's
tacit support of the American attackers.

To restore calm, the Saudi Government suspends oil sales to
the US in what it privately assures Washington is just a temporary move. But
Iraqi exports under the UN-approved oil-for-food programme have already dried up
and the damage is done. With a third of the world's known oil reserves in
jeopardy, global prices zoom to US$44 (NZ$105) a barrel.

Mr Bush authorises an emergency withdrawal of 200 million
barrels from the Strategic Petroleum Reserve held in underground caverns in
Texas and Louisiana. It will make up the shortfall in US imports for barely
a fortnight unless he can persuade voters to switch overnight from conspicuous
consumption to manic conservation -– a trick he is loath even to try...

Plans for former Soviet Central Asia are even more ambitious.
Starting in Azerbaijan, at least two pipelines will eventually carry oil and gas
to the outside world via Georgia and Turkey, and in Turkmenistan, a land of
scorching deserts and vast gas reserves bordering Afghanistan to the north, the
current fighting has paradoxically revived hopes of long-term stability making
possible the most Herculean undertaking of all: a gas pipeline over the Hindu
Kush to Pakistan and India...

(Editor's note: what about through Afghanistan if America
manages to conquer the Taliban?).

The stakes could hardly be higher. With America alone
spending US$144 million a day on imported crude, oil remains the world's great
wealth-creator...

It also forces importing nations to do business with regimes
they would otherwise condemn...

The former Soviet Union pumps four million barrels a day,
projected to rise to seven million in the next five years and much more within a
decade...

Saudi Arabia's energy reserve remains the biggest and most
accessible on the planet by such a margin that it would take a full-blown
revolution there to end its dominance of Opec and the global oil business.

At 262 billion barrels, Saudi Arabia's known reserves are
still biblically huge. Its infrastructure is so extensive that if Iraq were to
shut down production altogether, it could summon enough reserve capacity within
90 days to make up the shortfall and stabilise world prices...

Analysts agree it is highly unlikely that Saudi Arabia will
stop selling its oil to the West, or that the West will stop buying it. Yet
if nothing changes within the world's only oil superpower, it could detonate a
demographic time bomb. The Saudi royal family has cleaved to power since the
1930s thanks to an unwritten social contract by which its subjects remain
politically submissive in return for free, oil-funded education and healthcare
and an average annual income of US$7000. That contract is crumbling.

Saudi Arabia's population is young, fast-growing,
underemployed and increasingly resentful of the institutionalised corruption
that is said to siphon the oil revenue to fund the louche lifestyles of the
country's 15,000 princes.

It is February 2002 again. The pundits are digesting Mr Bush's
brave switch away from the Middle East in search of apolitical oil. They ask if
he has found the answer to America's latest energy crisis and conclude that he
has probably not, because oil, by its nature, will always be political.
Instead they paint a picture of an American turning away from oil altogether in
favour of liquefied natural gas, methanol, solar and wind power and hydrogen,
the holy grail of alternative fuels..."

We are living in strange days and therefore, these are
certainly days to recognise the spiritual aspect to our lives and make sure we
are right with God through a born-again experience, and then walk closely with
our Saviour.